What's new! In M&A TAX


A bimonthly publication by PwC Transaction Services - 2ST Edition - October 2009
By Rodrigo Bastos, M&A Tax Partner and Private Equity Tax Leader in Brazil

Some very welcome news, such as the Pre-Salt Oil, 2014 World Cup, the 2016 Olympic Games in Rio, the award of Investment Grade by Moody’s, the formal announcement of the recession end, amongst many others, have changed the mood for businesses in Brazil. Under this booming scenario, the third quarter just ended showing a clear recovery in our M&A industry. Most of the outstanding M&A transactions came to life, after months of uncertainty, supported by more reliable forecasts, encouraging economic indicators, new IPOs waves and also the undisputable necessity of joining forces in order to survive the tough and very competitive periods to come. As a consequence, out of the 440 disclosed transactions for the first 3 quarters, 184 transactions (or about 42%) refer to Q3, which brings us to approximately the same levels observed during the period before the economic crisis.

On the tax side, one quite important aspect has been the new amnesty program (the Crisis Refis) recently launched by the Federal Government, that has made it possible for buyers to revisit past potential local acquisitions . The significant reductions in interest and penalties, the use of NOLs, the possibility of electing tax debts with low chances of success in court and to pay them over 180 months are encouraging local companies to join this program. It makes their profile of tax risk more predictable, and as a consequence, it substantially reduces the acquisition risk related to tax succession in connection with tax contingencies that have not yet materialized.

In this context, investors who have still not looked again at transactions which were discarded in the past should speed up in order to get the best the Crisis Refis. Other investors may be looking at these very same companies with different eyes. The conclusion is that this is the time to act quickly, the economics are looking different now, some quite interesting tax incentives are still available and the M&A Market is moving faster.

What’s new in this edition

IPI Premium Credit
Impacts of the decision handed down by the Brazilian Supreme Court related to the validity of such tax credits.

The Brazilian Government increases IOF taxation on stock market transactions and Investment Participation Funds (FIP)
Impacts of the IOF taxation increase on stock markets transactions and FIP.

SPED and its effects on the Brazilian tax environment
The implications for M&A transactions, due to the implementation of the SPED (Public Digital Bookkeeping System) in Brazil.

State Tax Incentives and the tax war
Main impacts of the tax war related to the State Tax Incentives.
PDF file:    Download

Language: English

Format: Adobe Acrobat PDF

Size: 209 Kb

We will be glad to hear from you. Please let What’s new! have your comments, suggestions and ideas.
E-mail to fabio.dantas@br.pwc.com or rita.canto@br.pwc.com
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